Q: When an employee takes an extended leave of absence for family and medical leave, are we required to maintain their health insurance on the same terms as when they were actively at work?
A: Maybe. It depends on (1) how many employees you have; and (2) whether your company is covered by a fully-insured health plan regulated by the Connecticut Insurance Department.
The federal Family and Medical Leave Act is generally applicable to employers with 50 or more employees.
It also, among other things, requires employers to maintain an employee’s group health insurance coverage on the same terms as if he or she had continued to work.
For example, if an employer contributes 50% of an employee’s health insurance premium while the employee is actively at work, the employer must continue to do so while the employee is out on federal FMLA leave.
An employee on unpaid FMLA leave must make arrangements to pay their normal portion of the insurance premiums in order to maintain insurance coverage.
What If the Employer Is Not Covered by Federal FMLA?
The Connecticut Family and Medical Leave Act does not require that employers maintain group health insurance for employees on leave.
However, a little-known Connecticut statute—applicable to insurers—does require continuation of health insurance for employees on certain types of leave, including those covered by Connecticut’s FMLA and state workers' compensation laws.
Connecticut General Statute 38a-512a(a)(1)(c) is applicable to insurers who issue group health insurance policies in Connecticut.
It requires employees be given the option to continue coverage during an absence due to the employee’s illness or injury.
Continuation of coverage applies to both the employee and the employee’s covered dependents during continuance of the employee’s illness or injury, or for up to 12 months from the beginning of the absence.
Similar to the federal FMLA’s requirements, continuation coverage under this statute may be conditional upon the employee contributing their normal premium portion.
Continuation Coverage Limits
It is important to note that continuation coverage is only available when the employee takes leave for their own illness or injury.
While coverage would be available for an employee on Connecticut FMLA leave due to the employee’s own serious health condition, it would not be available for an employee taking Connecticut FMLA leave to bond with a newborn or care for a family member.
Before you terminate the health insurance of an employee on Connecticut FMLA medical leave, think carefully, even if you are a small, self-insured employer.
Do you terminate the insurance of employees who take other types of leave? Could this decision be viewed as discriminatory or retaliatory? Will it affect employee morale or retention?
All of these issues should be considered thoughtfully, and where possible, with the help of legal counsel.
Note: CBIA has requested clarification from the Connecticut Insurance Department regarding an employer’s potential liability for its failure to ensure the continuation of health coverage detailed above. We will update members as soon as more information is available.